Released Tax Reform Framework Eliminates Federal Historic Tax Credit Championed by President Reagan
The federal historic tax credit was not included in the Republican leadership’s outline for tax reform. Early champion of the credit, Ronald Reagan, once said they "made the preservation of our older buildings not only a matter of respect for beauty and history, but of economic good sense."
Update (11/2/2017): Today the House Ways and Means Committee released a tax reform bill that eliminates the federal historic tax credit (HTC).The National Trust for Historic Preservation is urging you to contact your lawmakers—in both the House and Senate—to include the historic tax credit in final reform legislation. Call and write your members of Congress today to show your support for this fundamental preservation tool.
In 1981, President Ronald Reagan significantly expanded an innovative program to draw investment to the rehabilitation of older properties, now known as the federal Historic Tax Credit (HTC). Spotlighting the initiative, President Reagan said: “I’d like to draw your attention to a major innovation that our administration put into place less than three years ago: increased tax credits for the renovation of older buildings. With that one initiative, we helped to send your tax dollars back into your communities.”
He was so impressed with the program’s success that he made it a permanent part of the tax code in 1986, the last time major tax reform managed to make it through Washington. President Reagan understood the power of enabling citizen redevelopers and preservationists to act on their own initiative. It He said: “I know your efforts [through the use of this tax credit] will help to give our towns more restored buildings, more jobs and a renewed sense of pride.”
Since that time, for more than three decades, the HTC has successfully implemented a national policy of preserving our historic resources. It is the most significant investment the federal government makes toward the preservation of our historic buildings and played a critical role in revitalizing small towns and cities across the country. The use of these tax credits unlocks capital, creates jobs and increases economic activity both directly and indirectly.
And like the brownfield program's consistently large return on investment, the federal historic tax credit has proven itself over its life to be a reliably positive, profitable investment for taxpayers—consistently returning more tax revenue to the Treasury than it costs. The HTC returns $1.20-1.25 in tax revenue for every dollar invested, not including the many other benefits from restoring buildings, revitalizing communities and spurring economic growth. Yet because historic rehabilitation projects frequently have higher costs, greater design challenges, and weaker market locations, they face lender and investor bias against investments.
Produced by the National Park Service and Rutgers University, the Annual Report on the Economic Impact of the Federal Historic Tax Credit for FY 2016 revealed that use of the federal historic tax credit (HTC) reached an all-time high in fiscal year 2016 (FY 16). Between 1978 and 2016, the HTC has contributed to:
- More than 42,000 buildings being restored;
- More than $130 billion in private capital being reinvested in our communities;
- Nearly 2.5 million jobs being created; and
- An average of $1.20 being returned to the Treasury for every dollar invested.
In short: the HTC is not just an engine of reuse and revitalization in our communities. It is a pro-growth investment that works. Its worked in Kansas City, for example, where a former train station power house building is now the stunning home of the city’s ballet company. In Baltimore, a long-shuttered brewery was transformed into a social services organization that helps area residents get back on their feet. In Butte, Montana, a grocery store has brought new life to what was a vacant department store.
Despite a proven track record of stimulating economic growth and preserving our architectural heritage, however, the historic tax credit faces an uncertain future. Right now, as Republican lawmakers close in on finalizing new tax reform legislation, an outline meant to guide the legislative process failed to retain the historic tax credit. Released by White House and Congressional leaders, this framework will guide House and Senate tax writing committees, who are now drafting tax reform legislation.
They may follow the guidance of leadership, and several other influential tax reform proposals, which recommend a repeal of this essential credit.
The National Trust for Historic Preservation is asking for help to ensure that today’s tax writers appreciate the value of the federal historic tax credit to the future of our country—that it helps preserve and enhances the treasures of our past, while promoting economic growth and a higher qualities of place and life for all.
Below, listen to what makes the program so powerful in President Reagan’s own words, and then consider taking a minute to urge your lawmaker to continue this important legacy and keep the tax credit in any reform of the tax code.
Still with millions of greyfield and brownfield properties in America, this moment seems an inopportune time to choke off investment by eliminating these proven tax credits. And with high national debts and deficits, the elimination of programs that are net contributors to the country’s balance sheet would be directly counter-productive. In fact, with such high demand for redevelopment projects, this is the kind of investment that can help unlock a bottled up boom and leave a legacy of history, productive use and quality of palce that lasts for generations to come.
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